Announcing The DDS Canadian Drawback System With the cooperation of the Citizen Watch Company, Dutycalc has developed a PC-based drawback software package for Canadian companies. Sold as a stand-alone solution, the DDS Canadian Drawback System is used to process and produce Canadian drawback claims that are filed with Canadian Customs. For pricing, more information or to arrange an online demonstration, please visit the Dutycalc Web site.

Drawback Claim Check List - Check it twice!

You're ready to file your first (or maybe your fiftieth!) drawback claim. You're in a bit of a hurry, because you need to get the claim to Customs before the weekly cut-off day. Even so, don't rush! Make sure you check over that claim-maybe even double check it. After all, you certainly don't want some minor mistake to cause Customs to kick it back and then hold up payment. Right? So with that in mind, we offer you a 7-step "Claim Check List":

Step 1. Look over your claim form. Are all the applicable boxes filled in correctly? Did you print a contact name and telephone number in the event that Customs has a question?

Did you make an extra copy for Customs to date-stamp and send back to you for your files? Don't forget to include a self-addressed stamped envelope with that. It's always nice to know that Customs actually received your claim by getting a date-stamped copy back in the mail.

Step 2. Look over your claim reports. Are they all there? Check for clerical errors.

Step 3. Confirm ABI/Diskette procedures. Filing via ABI? If so, did you include a copy of the ABI acceptance with your claim? Filing with Diskette? Make sure you include the Diskette with your claim.

Step 4. Check Bond entries carefully. Need a Bond? If filing a claim with a single entry Bond, did you prepare the Bond correctly? In addition to checking the Bond carefully, mark down on your Bond log:

• The Bond number
• The company name
• The amount of the Bond
• The date

Step 5. Clearly mark your claims folder. Mark your claims folder appropriately-putting your company name, claim number, type of claim and contact information on the top edge of the folder. If filing ABI, mark the cover of your claim accordingly.

Step 6. Keep copies. Make sure you have copies of everything:

• Claim form
• Claim reports
• Your portion of the Bond
• The copy of the ABI acceptance
• Then file it all away!

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Customs Office Closure Update On November 25, President Bush signed the "Homeland Security Act of 2002" into law. The Homeland Act contains language that clearly prevents any Customs office from closing - but we are hearing that Customs is still considering implementing the closures before the Act becomes effective. For those who haven't heard, Customs has proposed to close three drawback offices (Boston, Miami and New Orleans.) within the next year. For more information on the proposed office closures, see Planned Closure of Three Customs Drawback Centers. We'll keep you posted!

Using Drawback for a "Competitive Edge"

You've probably heard it before, but we'll say it again: Companies who take advantage of drawback are able to compete more effectively in foreign markets. Because drawback reduces the cost of imported materials, cash flow and profits improve substantially.

Each year thousands of companies continue to overlook potential duty refunds while their counterparts recover millions of dollars. Are you taking advantage of duty drawback? If not, what does it take? You need: Knowledge and Tools.

Knowledge

Start by learning about the topic of drawback. Then evaluate whether or not your company has drawback potential. A qualified drawback specialist can guide you through the process.

At first glance, drawback can appear daunting. But in reality, you'll have come a long way once you have an understanding of the regulations. The U. S. Customs Web site is a good place to start. Here you can learn the fundamentals of duty drawback, from basic publications about the topic to the drawback regulations themselves. You'll also find the necessary applications for a duty drawback program. By just reviewing the applications you'll see you can get a pretty good education in duty drawback compliance.

Need more information? Visit the Dutycalc Web site or-better yet-give us a call.

Tools

Once you've decided to take the plunge into drawback, you need the proper tools to ensure the job is done right. So what will it be? In-house drawback software or a qualified drawback specialist? Or a combination of both?

We suggest you start off with the assistance of a qualified drawback specialist. Then, when you feel comfortable handling drawback software on your own, you can convert over to an in-house drawback system.

Follow these two steps, and provided you have drawback potential, your company will soon earn that "Competitive Edge."

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Ask Dutycalc: How does our company capture a drawback refund?

Q. I believe my company has about $10,000 worth of drawback going back the three years allowed. Is it worth capturing and can you help me?

A. It depends on: The volume of data; The type of drawback; and Where the product is exported.

Volume of Data

Let's first look at the volume of data, that is, one needs to look at the amount of data that would need to be keyed into the drawback system. If it takes an inordinate amount of time for you to key in data, it probably isn't cost-effective to pursue a drawback program of this size.

But if you don't have a lot of data to key in, or even better, if some of the data is available in your company's mainframe and can be downloaded to the drawback system, then this may be a worth-while drawback program. Type of Drawback The type of drawback (whether it be unused or manufactured goods) is also a major factor in determining whether or not a drawback program is worthwhile. Unused drawback may be the least complicated when it comes to applying for approval from Customs to file for drawback. Manufacturing drawback, on the other hand, requires that a special contract be obtained from Washington, D.C. - or perhaps your local port (if you're using a general contract in addition to the usual information required on the application). For a drawback program estimated at $10,000, only an unused drawback program would warrant further attention. The time it would take to prepare a manufacturing application and process a manufacturing drawback program would outweigh the commission one would potentially receive.

Where the Product is Exported Finally, we come to the absolute "do or die" question that makes or breaks a drawback program these days: Does any of the product get exported to Canada or Mexico? Where a product is exported and whether it is an unused or manufactured product come into play when a product is exported to Canada or Mexico. If exporting manufactured goods to Canada or Mexico, the drawback will fall under the "lesser of" rule - meaning whichever duty is less than the U. S. duty (be it Canadian or Mexican) will be the one that is refunded. In a lot of cases this duty is actually zero and no drawback is obtained. Even if the lesser of the two duty amounts is not zero (but a modest sum of money), it still may not be worthwhile. Why? Because on top of U.S. duty payment proof, you have to provide Canadian Import Entries and proof of payment to Canadian Customs. Plus, if you want to file an unused drawback to either Canada or Mexico, you have to do so using the direct ID method. This, too, can be a bit of a task if the data is not in the proper format to allow direct identification. Let's say, however, that the product is exported to Canada and doesn't fall under the 'lesser of' rule - and you are able to provide the necessary direct identification documentation with little effort. Then this drawback program may still be one worth pursuing. So where does this all leave us? Determining an amenable commission. We'll start with the best scenario, using an unused drawback program with products exported to countries other than Canada or Mexico. Assume the data is very clean and accessible with imports available electronically - 12 to 15 imports per year and four to six exports per year. You'd have to expect average fees in the range of 30% to 40% for a drawback program with these characteristics (keeping in mind the estimated total duty refund is $10,000).

Now let's say that the drawback program has unused product exported to Canada, which means the direct identification rule applies. Assume the data is accessible, but less so (that is, it seems to be okay for direct ID but it's not electronically available). Then assume you have 24 to 30 imports per year and 10 to 15 exports per year (meaning much more data entry). In this case, a commission fee of 40% to 50% would not be out of line. But bear in mind that even though these commissions may sound high enough to make even a lawyer blush, they may also include 1) time to prepare the applications to Customs and 2) the compliance program setup.

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Upcoming Modernization Events
U. S. Customs Service
Trade Support Network Meeting
Sheraton National Hotel
Arlington, VA
February 25 - 27, 2003

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